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Telecommunications Firms and Their Increasing Expansion

Verizon has recently struck up a $21 million deal with the NFL to acquire the exclusive streaming right to next season’s week three match-up between the Baltimore Ravens and the Jacksonville Jaguars. The game will be played at London’s Wembley Stadium. The game will be distributed through three of Verizon’s subsidiaries; its AOL platform, its mobile video service go90, and site oriented towards the young male audience called Complex. Verizon will have exclusive global rights to the game, except in Jacksonville and Baltimore territory, where the game will viewable via local cable.

In February, Time Warner stockholders passed a vote in favor of the company’s proposed merger with AT&T. AT&T will acquire Time Warner for $85.4 billion. The argument that both of these companies are making in favor of this merger is that it is a vertical acquisition, meaning that the two companies are not direct competitors. This argument is how both companies plan on fending off the Department of Justice.

My point in citing both of these recent events is that the telecommunications industry, similar to other industries in the American economy, is becoming completely monopolized. Verizon has exclusive global streaming right to an NFL game next season. The millions of NFL fans in the US have no choice but to use Verizon’s services to watch a football game. Also, take a look at the different technological vehicles Verizon is using to stream the game. I remember being a first-grader and having my parents describe to me what email was, showing me their AOL address. Verizon began as a mobile phone company and has expanded into something that basically no consumer can avoid using.

In addition, AT&T’s merger with Time Warner is problematic for American consumers. I agree that AT&T and Time Warner are not direct competitors, but AT&T is a telecommunications company, and Time Warner is a cable company. AT&T is a distributor of cable television, also known as Time Warner. This cannot be good for consumers. Saying that this merger is acceptable because the acquisition is vertical is picking the lesser of two evils. Two competitors merging, or a distributor merging with a distribution company is bad for consumers either way.

My general point is that telecommunications firms continue to grow. The more they grow, I think, the worse off we all are as consumers. As the world continues to become more and more invaded by technology, these firms will expand their size and power, and we will be at their will.

4 thoughts on “Telecommunications Firms and Their Increasing Expansion”

Sean I liked your discussion on the trend of increasing monopolization across various industries in the United States; I too have noticed this, and it is rather troubling. I am not sure how the Department of Justice and other federal agencies can defend themselves in many cases of sitting idle while monopolies are allowed to form. I am not sure what the right next step is to take, though, and it certainly seems as if they are unsure as well.

In telecommunication monopolized countries like South Korea (SKTelecom, Korea Telecom Freetel, and LG telecom) there are popular deals there that offer television deals for the phones and it’s not uncommon where people sub out their TV’s to watch shows and sporting events from their phones (they even come with antennas). It’s definitely bad for consumers when there are less companies (usually leads to higher PS and lower CS) but then again the smartphone is already 50 machines in one and this trend towards innovation has so far improved our lives in the long run.

Very interesting article Sean, I wasn’t aware of the Verizon deal for exclusive rights to that game. I think we’ve already seen a media revolution in our lifetime and it will be interesting to see where things go. I remember when Netflix use to deliver DVDs to my house and now it is a streaming service worth billions, and creating original content; making its presence felt to the cable companies. Still, those media giants are huge. It’s estimated 90% of what we read, watch and listen to is owned by 6 companies; Comcast, News-Corp, Disney, Viacom, Time Warner and CBS.

Great Article! I was aware that Verizon and AT&T were looking to expand from telecommunications. However, I was not aware of the extent and legitimacy of these mergers. In my opinion, AT&T’s acquisition of Time Warner is more significant than Verizon’s purchase of the rights to the London game. While football racks in huge revenue for television providers, it’s only one game. Where as AT&T’s merger with Time Warner can result in huge long term profits, especially since they sell complementary goods.